* * * * *
Let me make one last point, which does not come from Kotz's report and has been written of before here, but which is very important in light of the SEC's defacto intentional misconduct.
The SEC's misconduct not only resulted in continuation of, and enormous growth over the years in the size of, Madoff's Ponzi scheme, but also resulted in a dramatic reduction in the amounts of money available to victims when the fraud finally collapsed in December 2008. It has been claimed that, because of the market collapse that began in that year, twelve billion dollars was pulled out of Madoff by skittish investors in the last six months. Before that Madoff apparently never had to face waves of major redemptions, so that major percentages of the funds that he had taken in remained in his account. Some was taken out for his own use and that of his family members, some to float the market-making side of his firm, and some likely went to the Mafia, various secret services (American, British, Israeli or whatever) or to whomever else was a background part of the deal. (Why did Madoff pay out six billion dollars to a guy who invested only 1.5 billion dollars -- to Picower. Where did that money go and why? Was it for a secret service?) But the amount of invested money left in Madoff was apparently gigantic until close to the end, as will be shown by records now being kept secret by JP Morgan Chase, by Picard, by the FBI and by the U.S. Attorney's Office. By defacto intentional conduct that resulted in Madoff's Ponzi scheme staying alive until it collapsed due to billions upon billions of dollars being redeemed by investors due to the greatest economic collapse since the Depression, the SEC's defacto intentional conduct resulted in investors losing repayments of many billions of dollars -- losing repayments of 12 or 17 billion dollars, or even 20 billion dollars or more, that would have been readily available to repay them from Madoff's account in JP Morgan Chase had the Ponzi scheme been exploded by the SEC even as late as, say, 2004 or 2005 or 2006 or 2007, had it been exploded by the SEC before "the great redemption caused by the economic disaster that began in 2008.
So the defacto intentional misconduct of the SEC resulted, as I say, not only in the growth of Madoff's Ponzi scheme from "only about 500 million or a billion dollars in 1992 to the 65 billion dollars reported on the November 30th statements, but also resulted in a fantastic reduction of billions of dollars in the amounts available to repay innocent defrauded victims. What is more, when you consider that a large amount of the redemptions in the final stages of the Madoff fraud appear to have been by people who were complicit in the fraud and who would therefore have had no right to any money after the fraud was discovered -- Picard is in toto going to sue them for something in the neighborhood of 12 or 15 billion dollars -- you can see that, if the SEC had ended the fraud, and had done so when it should have, the amounts available to repay innocent investors could very conceivably been close to, equal to, or even more than the amounts that they actually invested (their cash-in), could even have covered payments to innocent investors of portions of the income they thought they had earned from Madoff. For these reasons too, it is the SEC, and therefore the US Government, that is responsible for the dire poverty which now afflicts so many innocent Madoff victims.*
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